Investing for beginners

2011-11-12 11:11

Books on managing money also deal with saving and investing, and explain concepts like unit trusts and exchange-traded funds. But many people who want to invest their money themselves just don’t know where to start

Shares: A Buyers Guide by Alec Hogg

Price: R150 through Moneyweb Email: dorisl@moneyweb.co.za

This book lays out, quite simply, how to go about starting to invest in the stock market. It also provides some basic investment rules.

It equips the starter investor with the necessary background and tools to understand the stock market, and because it is written by a South African, it is more relevant than many of the investment guides that come from overseas.

In his book, Hogg taps into the tools used by the world’s greatest investor, Berkshire Hathaway chairperson Warren Buffett, and other masters who have made a fortune through margin of safety and cash flow.

It’s Not About How Smart You Can Be. It’s About How Wealthy You Can Be

Mark Varder and Joost Hulsbosch

Price at Kalahari.com: R154

If you have a spare hour to kill, you can read the entire book and learn how the stock market works and the benefits of investing in it. It sets out the facts of why you need to invest in the markets and why you don’t have to be a guru to make money.

There’s a very good explanation of exchange-traded funds and how they work. The book supports the idea of index investing. In other words, just tracking the returns of the market average rather than investing in a fund that is actively managed and for which fees are payable.

This book will give you that ­“aha! moment” because it is so simple and yet so true.

Enough

John C Bogle

Price at Kalahari.com: R123

The opening chapter of this book contains one of my favourite anecdotes of all time. Author Joseph Heller is attending a party given by a billionaire.

Another illustrious author, Kurt Vonnegut, informed Heller that the host, a hedge fund manager, had made more money in a single day than Heller had ever earned from his wildly popular novel Catch-22.

Heller responded: “Yes, but I have something he will never have: enough.”

What Heller is talking about is knowing what really brings you happiness. No matter how much we accumulate, there will always be someone who has more.

We need to be thankful for what we already have. It is in this way that Bogle exposes the greed and avarice that runs the market. He talks about the fees charged by managers whether clients make or lose money.

If you want to understand what drives the market and want to learn more about index investing, then this book by Bogle, who founded Vanguard Mutual Fund – one of the largest index-tracking funds in the world – is worth a read.

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